Forecasting dairy herd development in China

Abstract

With the rapid development of the Chinese dairy industry, various researchers have examined the industry from many perspectives related to supply and demand. One of the most important factors for this industry is the total number of dairy cows and it is this aspect that will be addressed in this paper. This paper examines how economic and biological factors influenced the size of the Chinese dairy herd population using an autoregressive distributed lag model and a dairy herd inventory model. The estimated results showed that the biological process was dominating the development of the Chinese dairy herd. The ratio of milk to corn price, as an economic variable, is another factor that had an impact. Beef price, which was found to be an influential variable for the United States dairy cattle inventory did not have a significant impact on the Chinese dairy industry. This is expected to change as the dairy industry in China develops. Results from this study also suggest that Chinese farmers have a positive expectation in the long term towards the dairy industry and that there are high adjustment costs in dairy production in China. Finally, the projection results showed that it is very likely that the dairy cattle numbers in China would double between 2005 and 2010.dairy herd, China, cattle inventory model, projection, Livestock Production/Industries,